1) a depreciation of the dollar will have its most pronounced impact on imports if the
demand for imports is:
a.constant
b.inelastic
c.elastic
d.unitary elastic
2) the use of indifference curves helps us determine the point:
a.along the terms-of-trade line a country will choose
b.where a country maximizes its resource productivity
c.at which a country ceases to become competitive
d.where the marginal rate of transformation approaches zero
3) suppose that the united kingdom and italy abolish all tariffs on each other’s goods
and all restrictions on movements of factors of production between them. they also
implement a common protectionist policy toward other countries. this is an example of
a (an):
a.free-trade area
b.customs union
c.common market
d.economic union
4) a static welfare effect resulting from the formation of the european union would be:
a.economies of scale
b.trade diversion
c.investment incentives
d.increased competition
5) suppose brazil faces domestic recession and a current account surplus. should brazil
revalue its currency, one would expect the:
a.recession to become less severe–surplus to become less severe
b.recession to become more severe–surplus to become more severe
c.recession to become more severe–surplus to become less severe
d.recession to become less severe–surplus to become more severe
6) under the gold standard, a surplus nation facing a gold inflow and an increase in its
money supply would also experience a:
a.rise in its interest rate and a short-term financial inflow
b.rise in its interest rate and a short-term financial outflow
c.fall in its interest rate and a short-term financial inflow
d.fall in its interest rate and a short-term financial outflow
7) suppose that a steel manufacturer headquartered in japan sets up a subsidiary in
canada to produce steel. this practice is referred to as:
a.conglomerate integration
b.forward vertical integration
c.backward vertical integration
d.horizontal integration
8) with increasing opportunity costs, a nation totally specializes in the production of the
commodity of its comparative advantage; with constant opportunity costs, a nation
partially specializes in the production of the commodity of its comparative advantage.
a.true
b.false
9) refer to table 10.3. the current-account balance registered a surplus of $30 billion.
a.true
b.false
10) according to the quantity theory of money, a change in the money supply will
induce an inverse and less-than-proportionate change in the price level.
a.true
b.false
11) copyrights, trademarks, and patents are used to protect the intellectual property of a
nation from foreign imitators.
a.true
b.false
12) economists have generally found that economic growth rates have a close relation
to:
a.openness to trade
b.education
c.communications infrastructure
d.all of these
13) a problem that economic policy makers confront when attempting to promote both
internal and external balance for the nation is that monetary or fiscal policies aimed at
the domestic sector also have impacts on:
a.trade flows only
b.capital flows only
c.both trade flows and capital flows
d.neither trade flows nor capital flows
14) firms undertake multinational operations in order to:
a.hire low-wage workers
b.manufacture in nations they have difficulty exporting to
c.obtain necessary factor inputs
d.all of the above
15) government procurement liberalization permits a country to realize cost savings
resulting from the trade effect, competition effect, and economies-of-scale effect.
a.true
b.false
16) the largest amount of trade with the united states in recent years has been conducted
by:
a.canada
b.germany
c.chile
d.united kingdom
17) refer to table 11.4. on wednesday, the 30-day forward franc was selling at a:
a.1 percent premium per annum against the dollar
b.2 percent premium per annum against the dollar
c.1 percent discount per annum against the dollar
d.2 percent discount per annum against the dollar
18) figure 5.2 illustrates the revenue and cost conditions of abc inc. which sells
calculators in canada and france.
figure 5.2. international dumping
consider figure 5.2. compared with the total revenue and total profit that abc inc.
realizes in the absence of dumping, with dumping the firm attains a:
a.fall in revenue of $18; fall in profits of $15
b.fall in revenue of $18, fall in profits of $18
c.rise in revenue of $18, rise in profits of $15
d.rise in revenue of $18, rise in profits of $18
19) under u.s. commercial policy, which clause permits the modification of a trade
liberalization agreement on a temporary basis if serious injury occurs to domestic
producers as a result of the agreement?
a.adjustment assistance clause
b.escape clause
c.most-favored-nation clause
d.reciprocal-trade clause